UK Services Sector Expands in March
The just published data on the UK's services PMI has shown that Britain’s services sector expanded at a faster than expected pace in March. Meanwhile in the Euro area, the final print of the Euro zone’s services PMI unexpectedly fell in March, recording its lowest reading since January 2015. Also, services PMI in the Euro area peripheral economies for March came in shy of their previous estimates. Going ahead in the day, investors will eye the Euro region’s retail sales growth data which is expected to remain flat in February.
In the US, investor focus will be on the final print of the US services PMI reports by ISM and Markit, scheduled for release later in the day. Also on tab will be US trade data along with JOLTS job opening numbers for further direction.
Pound Sterling – UK Markets
Earlier today, the Pound surrendered most of its gains against the US Dollar amid a broad based recovery in the greenback. However, Sterling has recovered some of its losses against the US Dollar following the release of upbeat UK services PMI data. The just out new survey figures indicated that Britain’s services sector, which makes up more than three-quarters of the private sector economy, expanded at a faster than expected pace in March, picking up from its 35-month low level registered in the previous month. However, business confidence remains subdued with rising fears over the UK’s European Union referendum, which is scheduled to be held in June this year. Separately, BRC retail sales data scheduled for release later in the day will be eyed for further direction.
Going forward, a report indicating the GDP estimate over the last three months till March, scheduled towards the end of the week, will attract significant market attention.
US Dollar – US Markets
The US Dollar has trimmed some of its losses against the Euro this morning as investors look forward to fresh signs in today’s session to gauge the health of the US economy. ISM’s non-manufacturing figures due later today are expected to reveal that the pace of growth for the services sector narrowly expanded in March. Also, the final print of Markit services PMI will be keenly watched as markets expect it to show a slight improvement in March for the services sector activity.
Yesterday, the greenback erased some of its losses against the common currency for a brief period following comments from Eric Rosengren, the President of the Federal Reserve (Fed) of Boston. The typically dovish Fed official indicated that markets were being too pessimistic about the central bank’s rate increase outlook. Additionally, he anticipates a resilient economy accompanied by full employment and a gradual rise in inflation, in the wake of abating global headwinds. Meanwhile, fresh orders for factory goods in the US declined for a third time in the last four months, as orders for manufactured goods dipped amid weak global demand and a stronger greenback.
Euro – European Markets
The common currency is trading on a weaker footing against the US Dollar this morning. The just out data showed that the final services PMI reading for the Euro zone indicated that the sector expanded at the slowest pace in 15-months in March. Meanwhile, the final composite PMI index for the Euro zone barely accelerated in March, up from a 13-month low recorded in February, as demand faded especially for the services sector. Earlier in the day, data showed that German factory orders unexpectedly dropped to a five-month low in February, hinting that the trade in the largest economy of the Euro zone was weighed down by waning global demand, leading to a slowdown in German exports. The previous reading was revised to show a slight pick up in factory orders in Germany at the start of the year.
Later today, investor focus will shift towards the Euro zone’s retail sales growth which is anticipated to remain flat in February. However, market participants might expect gains in consumer spending for February, following an unexpected reading recorded last month.
Other Currencies – Highlights
The Canadian Dollar is trading on a weaker footing against the US Dollar today following the recent weakness in oil prices which was triggered by scepticism over whether the major oil producers would come to an understanding regarding a deal to cap output. However, the local currency has consolidated its gains against the greenback since touching an almost six-month high after the domestic economy was stronger than expected in January.
The direction in the US Dollar - Canadian Dollar currency pair this week will be influenced by a chunk of economic releases in the US, while investors will look forward to today’s trade data along with Friday’s jobs data in Canada for further insights into the health of the domestic economy. Today’s trade data is anticipated to show that Canada’s trade deficit might widen in February for a seventeenth consecutive month in the wake of weaker oil prices. Meanwhile, gains in oil prices in the previous month might prop up the export numbers for Canada.